GST on gold jewellery making charge slashed to 5%

At present, there is no tax on jewellery making charges.

MUMBAI: In a move that would reduce the imminent tax burden on jewellery buyers and enhance pricing transparency, the GST Council slashed indirect tax on making charges to 5 per cent from 18 per cent penciled in earlier at the latest meeting of the GST Council.

Making charges on gold-based jewelry are as high as 10-12 per cent of the cost of gold, and high tax incidence would have increased the burden on the end consumer, said Chirag Sheth, a research consultant at Metals Focus that provides data to the World Gold Council. Lowering the rate was a “good“ decision, he added.

Requests for lower taxes on jewellery making charges came from the All India Gem & Jewellery Federation, the India Bullion & Jewellers Association (IBJA), and other trade representatives. The new tax kicks in from July 1.

At present, there is no tax on jewellery making charges. The GST Council meeting held earlier this month had fixed GST on precious metals and diamonds, including jewellery, at 3 per cent. However, tax on making charges was set at a much higher slab of 18 per cent.

This would effectively have raised tax for consumers to over 4 per cent, more than twice of what was being currently charged in the form of 1 per cent each on VAT and excise on jewellery.

“The cut will not only reduce the burden on consumer, but also promote greater transparency," said Nitin Khandelwal, chairman of the Gem and Jewellery Federation.